Inland Revenue has released its compliance focus on offshore tax transparency, together with guidance to assist tax agents in complying with the international rules.
The compliance focus highlights the extensive international exchanges of information taking place as well as the new intelligence tools being used in tracking down people who don’t pay their fair share of tax.
Inland Revenue spokesperson John Nash says New Zealand tax residents are generally required to pay tax on their worldwide income, regardless of any withholding tax deducted overseas or whether the income has been repatriated to New Zealand.
“New Zealanders have become increasingly involved in overseas investment. They’re taxed on their worldwide income including things like rental income from a property overseas, interest from an offshore bank account, and returns from a portfolio of overseas shares.
“We tackle international tax compliance by making it easy for people to get things right, hard for them to get it wrong, and costly for those who are determined to avoid their obligations.
“The vast majority of taxpayers do voluntarily meet their offshore tax obligations, but there are always some who look for ways to evade or avoid paying.”
“That’s where the new tools and New Zealand’s wide network of tax treaty partners come into their own. Our improved intelligence capability means we are only in the lives of those customers who deserve further inquiries and interventions.”
John Nash says with the increasing complexities of global investment, such as new challenges arising from the gig/sharing economy and crypto assets, Inland Revenue will continue to actively participate in international solutions.
“Inland Revenue will also continue to run compliance campaigns to verify and facilitate compliance by New Zealand tax residents in returning their offshore income.
“We have an ongoing monitoring programme to ensure people return their overseas income as they should, and we’ll verify customer records against additional information received from treaty partners for later years.”
Inland Revenue launched the offshore tax transparency package earlier this week and the documents are available online - Compliance Focus for Individuals (ird.govt.nz)